Wednesday, June 7, 2023

Why can the G7 no longer aspire to dominate the world?

“Goodbye G7, hello G20.” This was the title of an Economist article about the first Group of 20 summit in Washington in 2008, which argued that the summit represented “a decisive change in the old order”.

However, the expected global cooperation with the G20 has not reached the expected levels.

Today, hopes for a cooperative global economic order, which peaked at the G20 summit in London in April 2009, have evaporated. Still, it’s not “goodbye G20, hello G7”. The world dominated by the G7 is far more remote than the G20 collaboration. Neither global cooperation nor Western dominance seems possible. What can happen; what can be done? Unfortunately, the two possible responses are division on the one hand and chaos on the other.

Yet, this is not what the communique of the G7 heads of government meeting in Hiroshima suggests. The release talks about all the big issues in the world. Cover: Ukraine; disarmament and non-proliferation; Indo-Pacific region; global economy; Climate change; Environment; energy including clean energy; economic resilience and economic security; Business; food security; Health; Labor; Education; digital world; Science and Technology; gender perspective; human rights, refugees, migration and democracy; terrorism, violent extremism and transnational organized crime; and relations with China, Afghanistan, and Iran (among other countries).

At 19,000 words, the statement reads like a manifesto for a one-world government. In contrast, the communique of the G20 London summit in April 2009 was just over 3,000 words. This comparison is unfair, given the economic crisis that followed the collapse of the housing bubble in 2008. The current G7 releases seem like an unfocused wish list that may be of little use: when everything is a priority, nothing is.

Furthermore, the US “unipolar” moment and the economic dominance of the G7 are a thing of the past. It is true that the latter remains the most powerful and united economic bloc in the world. For example, the G7 continues to produce all of the world’s major reserve currencies. However, between 2000 and 2023, their share of world output (purchasing power) would have fallen from 44 to 30 percent, while that of all high-income countries would have fallen from 57 to 41 percent. Meanwhile, China’s share would have risen from 7 to 19 percent. China is now an economic superpower.

The rise of China is a hard reality that cannot be forgotten

Through its Belt and Road Initiative, China has become a major investor (and creditor) of developing countries, although surprisingly it has to deal with the notoriously bad debts of the G7 developing countries. For some emerging and developing countries, China is a more important economic partner than the G7: as it is for Brazil, for example. President Luiz Inacio Lula da Silva may have joined the G7, but he wisely cannot ignore the weight China is taking on his country’s economy.

Power of BRICS, Global alternative to G7

The G7 is reaching out to other countries as well: their meeting in Japan included India, Brazil, Indonesia, Vietnam, Australia and South Korea. But apparently 19 countries have applied to join BRICS, which already includes Brazil, Russia, India, China and South Africa. When Jim O’Neill invented the idea of ​​BRICS in 2001, he thought it would be an economically relevant category. I thought BRICS would only be about China and India. Financially, it was correct. But it seems that BRICS is now well on its way to becoming a relevant global grouping. Clearly, what unites its members is a desire not to depend on the whims of the United States and its closest allies, who have dominated the world for the past two centuries. After all, how long can (or, for that matter, must) the G7 dominate the planet with 10 percent of the world’s population?

Sometimes you just have to adjust to reality. Let us put aside for the moment the political objectives of the G7 members, which include the need to preserve democracy right at home and to protect its borders, today, above all, in Ukraine. It really is the Battle of the West. But it is unlikely that this will ever be the world, most countries have other, more pressing problems and concerns. It was good that President Volodymyr Zelensky attended the summit. But only the West is really interested in the existence of Ukraine.

From decoupling to “risk elimination”

If we go back to economics, it’s also a good thing that the notion of decoupling, a harmful nonsense, has given way to the idea of ​​”risk removal”. If the latter can be converted into focused and rational policy making, it would be even better. But doing so now will be much more difficult than many imagine. It makes sense to diversify the supply of energy and critical raw materials and components. But, to take a prime example, it would be really hard to diversify the supply of advanced chips that Taiwan provides.

Managing the world economy

The bigger problem is how to manage the world economy. Will the IMF and the World Bank be the G7 bastions of power in an increasingly divided world? If so, how and when will they get new resources to meet today’s challenges? How will they keep pace with the organizations being built by China and its allies? Wouldn’t it be better to accept the reality and adjust the quotas and participation, recognizing the huge changes of economic power in the world? China is not going. Why shouldn’t we allow him greater participation in exchange for full participation in debt negotiations? Similarly, why shouldn’t we revive the WTO, in exchange for China accepting that it can no longer expect to be treated as a developing country but as a developed economy?

Beyond all this, we must recognize that any talk of “desking” that fails to take into account the two greatest threats facing humanity today, war and weather, is simply doing little or almost nothing. Is. Yes, the G7 must defend its values ​​and its interests. But he cannot run the world, although the fate of the world will also be of its members. Once again a way of cooperation has to be found.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
Latest news
Related news


Please enter your comment!
Please enter your name here